Over the past month, countless news stories and opinion editorials have characterized federal tax relief as “tax cuts for the rich.” Dennis Chinoy of Bangor peddled the same narrative at the end of his recent BDN OpEd that railed against pro-growth tax cuts: “How can this proposed tax bill possibly help ordinary Mainers or the country?”
Well, the answer is simple. By slashing taxes on small businesses — the engine of the U.S. economy — the Republican tax plan would encourage these job creators to invest in new hirings, higher wages and business expansion. A recent Job Creators Network survey reveals that most small-business owners would put tax savings to use by helping current and prospective employees, in addition to expanding business operations.
As director of the Maine Taxpayers United, I’ve heard many stories of Maine small-business owners who have closed shop because of heavy tax burdens. Our tax code makes it difficult for small businesses to succeed. This encouraged me to run for the Maine Legislature and advocate for lower taxes and greater economic freedom for all.
Currently, most small businesses are taxed at the top individual rate, which hits 39.6 percent at the federal level. Combined with state and local taxes, the small business tax burden can reach 50 percent. That’s right: Small-business owners often give up half their income to the government.
When small businesses are hindered by anti-growth policies, millions of employees — ordinary Americans — pay the price. America is home to nearly 30 million small businesses, employing roughly 60 million workers — half of the U.S. workforce. In fact, small businesses generate more than $470 billion in exports every year.
When employers have a healthy financial outlook, they have more resources to pass down to their employees. Sadly, the tax code makes that nearly impossible to do.
The Tax Cuts and Jobs Act would make it easier for small-business owners to reinvest in their business by cutting the top individual rate to 25 percent — a far cry from nearly 40 percent. How would it help Maine? The Republican tax bill would add roughly 3,800 jobs to the state economy over the next decade, according to the Tax Foundation. By 2027, Maine’s middle-class families would see an average jump in income of $1,933.
Is this the 1 percent? Republican tax proposals aren’t designed to reward hedge-fund managers and trial lawyers. The primary beneficiaries are employees and countless job-seekers who rely on small businesses for career opportunities and financial security.
The people of Maine should ignore misleading narratives and get behind tax relief. It will help all of us — rich, poor and everyone in between. I urge Sen. Susan Collins to stand up for hard-working Mainers and vote for tax cuts.
Beth O’Connor is the director of Maine Taxpayers United. She represents House District 5 in the Maine Legislature.
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